Sudden stop for conduits could drain €130bn from Europe’s banks

Esma HQ 230x150
By Owen Sanderson
01 Nov 2018

Obscure disclosure rules for European securitizations could bring asset-backed commercial paper conduits to a sudden stop on January 1, forcing the banks that sponsor them to step in with liquidity support of up to €130bn.

Asset-backed commercial paper (ABCP) conduits are bank-backed vehicles, which fund themselves independently with commercial paper, using the proceeds to buy private securitizations. These transactions usually package short-term instruments like trade or credit card receivables and bridging loans.

Conduits were implicated in the financial crisis, because some firms used ...

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